Abbay Media News
After seven years wait, National Bank of Ethiopia devalued the Birr by about 15%, Reuters reported.
The reason given by National Bank for the devaluation of the Birr is to reinvigorate and encourage business and improve the economy. Economists, on the other hand, are saying it is the result created by severe shortage of foreign currency. They included, it is the imbalance between export and import. The Product that the country sells to generate foreign currency is very small when compared with the amount it imports. This shows, they say, the command economy of the government is going down the sewer.
The president, Dr. Mulatu Teshome, in his speech during the current year opening of the Ethiopian parliament has indicated a major to improve the worth of Birr will be taken. He also indicated major constructions like railroads earmarked to be built in 2017 will not be done due to acute shortage of foreign currencies.
After the devaluation, banks will buy US$1.00 for Birr 27 while one can get up to Birr 33 for US$1.00 in black market. It is to be reminded seven years ago National Bank was boasting it will increase the value of Birr by 17%.
It is feared, the major taken by the National Bank to devalue the Birr will make exported commodities very expensive to consumers. It is also expected the action taken will only have short lasting effect on the export market.